New Delhi: Russia has offered India the chance to buy oil and other commodities at discounted prices. The offer is currently being considered by the BJP led Central government.
India, which imports 80% of its oil needs, usually buys about 2% to 3% of its supplies from Russia. But with oil prices up 40% so far this year, the government is looking at increasing this if it can help reduce its rising energy bill.
“Russia is offering oil and other commodities at a heavy discount. We will be happy to take that. We have some issues like a tanker, insurance cover and oil blends to be resolved. Once we have that we will take the discount offer,” one of the Indian government officials told a foreign news agency.
Some international traders have been avoiding Russian oil to avoid becoming entangled in sanctions, but the Indian official said sanctions did not prevent India from importing the fuel.
India and sanctions-hit Russia are exploring the possibility of using China’s yuan as a reference currency to value the rupee-ruble trade mechanism, two Indian government officials aware of the development said.
The two countries may also look at a floating rate arrangement as India, the world’s third-largest oil importer considers buying oil from Russia at a discounted rate to cool inflationary pressures.
To boost oil purchase from Russia, India is working to resolve key issues, including the availability of ships, insurance cover for imports and the oil blends, given the configuration of Indian refineries.
This assumes importance given the Western sanctions on Russia and PJSC Rosneft Oil Co. stating that Indian companies can acquire stakes in Russian projects and purchase Russian crude oil.
Rosneft’s production cost per unit is considered to be among the lowest globally.
“Rupee-ruble trade is very much on the cards. We are working on a currency arrangement to facilitate trade, especially as we also plan to increase oil purchase from Russia,” said one of the two Indian government officials cited above, requesting anonymity.
The rupee-ruble trade mechanism will allow Indian exporters to be paid in rupees for their exports to Russia instead of dollars or euros.
Under this arrangement, a Russian bank is required to open an account in an Indian bank while an Indian bank opens an account in Russia.